Early Call On Chicago

03/12/10 -- The overnight grains were firmer, led by wheat which posted gains of 17/22c. Corn finished 6/7c on spillover support from wheat, with beans up 7/8c.

Considering that the world can ill-afford a weather problem in 2011, suddenly the market is like a punch-drunk boxer on the ropes, getting hit from all angles.

Eastern Australia's wheat crop is in a mess, with talk of up to half of it only making feed grade. With Western Australia's crop slashed to around 3.5 MMT by drought, South Australia and east are expected to chip in with a wheat crop of around 20 MMT to make up the deficit. So we could be looking at taking up to 10 MMT out of the quality wheat supply chain for 2010/11.

The US winter wheat crop is entering dormancy in the worst state for years. The USDA reported on crop conditions this side of spring for the last time on Monday, pegging only 47% of the crop in the good/excellent category, one of the lowest percentages in years.

Now reports are circulating that around 9 million acres of China's principal wheat growing areas have been hit by drought. That's around 20% of the total planted area, and below average rainfall is expected to continue through to February.

Taiwan bought US wheat today, reputedly paying just under USD550/tonne for 14% Dark Northern Spring wheat, that would have to be amongst the highest prices paid in a good while as Asian buyers scramble for quality wheat.

Stats Canada peg all wheat production there this season at 23.2 MMT, 12.5% down on last year. Heavy spring flooding is also said to have taken it's toll on quality here too.

La Nina seems to be throwing up more difficulties than El Nino ever did with Argentina also under threat from only scant rainfall, with soybean plantings only managing to reach 57% done this week, according to the Buenos Aires Grain Exchange.

Meanwhile Russia's sharply lower and late planted winter wheat acreage faces a testing few months, and there are serious concerns as to their ability to be able to pull-off their targeted big spring planting increases.

For the week so far (excluding today's Globex markets) we see March CBOT wheat up 61 1/4 cents, Jan soybeans up 41 1/4 cents and March corn up 2 1/2 cents. Corn is clearly lagging on ideas that there may be 10 MMT more feed wheat on the market to tempt Asian buyers early in 2011.

Early calls for this afternoon's CBOT session: Corn and beans up 8-10c, wheat up 20-25c.